Healthcare Transparency Forges Ahead

Healthcare transparency took a quantum leap forward with the report from economists at the Health Care Pricing Project. The report analyzed the costs of healthcare from claims data for 88.7 million Americans from 2007-11 with employee-sponsored insurance from Aetna, Humana, and United Healthcare. An outstanding summary of the findings by Quealy and Sanger-Katz appeared recently in the NY Times.

The data highlight information that the health insurance industry has previously wanted to keep from public scrutiny – namely that the fees paid for healthcare vary widely from one region to another, and from one provider to another. Prices for routine medical services can vary 10 fold or more within a single community. A CT scan can be $210 or $1900, an MRI can be $425 or $4800 within the same community, just depending on where the service is provided. No one would buy gasoline for $30 per gallon when it is widely available for less than $3 per gallon, but we have been purchasing healthcare this way for many years.

While healthcare consumers have been oblivious to price variation, third party payers have made little effort to close this information gap. The absence of price transparency has been a major factor leading to annual increases in healthcare costs and health insurance premiums.

Perhaps this release of claims data from 3 of the 5 largest private health insurers signals the beginning of a new era when consumers will have access to healthcare prices before, or at the time of service. Transparency for healthcare consumers cannot come soon enough as millions began struggling with high deductibles on January 1.